Monday, Aug 01,
Prompt physical South African coal prices rose by around 50%/MT Friday, despite a fall of over $2 in oil prices on weak U.S. GDP data, buoyed by expected export disruptions due to the South African miners’ strike and calls for greater Chinese coal imports.
Wage talks between the Chamber of Mines and unions representing workers at the major coal mines in South Africa failed, the National Union of Mineworkers said on Thursday. Fresh talks began on Friday but both sides are far apart on terms.
If the strike continues beyond two weeks, miners will start to exhaust stockpiles at Richards Bay Coal Terminal and at the mines themselves. The strike’s impact so far has been more on sentiment and has encouraged some swaps buying which in turn has slightly bolstered physical values.
This is not expected to have much market impact; however, as key end-users in Europe and India with South African supply contracts can easily absorb delays or cancellations.
Any further pressure on the dollar will further bolster coal prices but raise coal exporters’ cash costs, the cost of mining and moving coal to the point of shipment.
Activity in general has remained limited for the past week, due to the seasonal summer lull when coal use is at its lowest in Europe.
Asia had been expected to come to the market’s rescue with a resumption of large-scale Indian and Chinese imports of benchmark origin coals such as South African.
This has not happened yet because key Indian buyers who account for more than 70 percent of the country’s imports have bought cheaper Indonesian material rather than South African – they are waiting, they say, until prices drop to $110 or even $100 before returning to the market.
Source: Reuters
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